Gold Price Forecast: XAU/USD remains weak below $1,740 after Powell-led blow
|- Gold Price holds lower ground after Friday’s over 1% steep sell-off.
- Hawkish Fed’s Powell sparks US dollar upswing, as risk tone sours.
- XAU/USD challenges critical daily support line, more downside likely.
Gold Price is licking its wounds while keeping its range below $1,740, as a fresh week kicks off on a defensive note. Markets reprice September rate hike expectations in the lead-up to the US Nonfarm Payrolls week, especially after Fed Chair Jerome Powell’s hawkish remarks at Friday’s Jackson Hole appearance.
Powell maintained that the Fed will continue with its tightening path until inflation is brought down substantially from a four-decade high. The Fed Chief also added that the September rate hike decision will be data-dependent.
The US dollar bulls the hawkish comments in their stride and staged an impressive comeback in American trading on Friday while Wall Street indices suffered heavy losses, as Powell doused speculation of policy easing in the months ahead to tackle economic slowdown.
The extension of risk-aversion combined with the dollar gains in Asia so far this Monday is keeping gold traders on the back foot, as they gear up for another critical week. The US will publish the critical ISM Manufacturing and Services PMIs ahead of Friday’s payrolls. Each incoming data will be closely examined for signals on the size of the next Fed rate hike.
China’s economic data will also hog the limelight, as it will have a significant impact on the market’s perception of risk sentiment, eventually affecting the dollar’s valuation.
Also read: Gold Price Forecast: XAU/USD closes the week above 50 DMA, what’s next?
Technically, gold price tumbled to challenge the critical rising trendline support, now at $1,735. Daily closing below the latter is needed to extend Friday’s sell-off towards the previous week’s low of $1,728.
Bears will revive the bets for a test of the $1,700 threshold in the upcoming sessions.
The 14-day Relative Strength Index (RSI) is holding flat but below the midline, backing the ongoing weakness in the yellow metal.
On the upside, any recovery attempts will need to beat Friday’s high of $1,759, around where the bearish 50-Daily Moving Average (DMA) lurks.
Gold Price: Daily chart
Gold Price: Additional levels to consider
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.